A BRAND new programme to encourage parents to save money for their children was introduced in 2005.

Every child born between September 1, 2002, and January 2, 2011, was entitled to at least £250 under the Child Trust Fund (CFT) policy, which they could access on turning 18 years of age.

It was the brainchild of Gordon Brown, the then-Chancellor for the Labour Party.

However, a large number of young adults who are now of age to receive this money have yet to do so.

In fact, according to a recent report by the Public Accounts Committee (PAC), more than 40% of 18-to-20 year olds have not withdrawn the money from their matured accounts.

Additionally, data reveals that nearly a million young adults are currently waiting to claim more than £1bn.

So, what’s gone wrong?

Some may not even be aware they have a CTF in their name. Some who haven’t claimed may have simply lost track of these accounts.

The PAC has criticised HMRC for a “failure in long-term planning” and called on the organisation to do more to identify and contact anyone who hasn’t claimed money they are entitled to.

The PAC also singled out trust providers for criticism, noting that despite charging fees for managing CTFs and potentially making up to £100m a year from these fees, they aren’t doing much to link dormant accounts with their owners.

Figures demonstrate only four out of 55 providers, according to statistics, have actively and voluntarily collaborated with the Tracing Group to locate customers who may have forgotten about their accounts.

Given that this same demographic is among those hardest hit by the cost-of living crisis, the fact that so much money is being left unclaimed by young people is particularly concerning.

About half of all CTFs were given to children from low income families, according to the PAC, and many of these families may not have made use of the funds at this time.

The CTF programme was created with the hope that young people would understand the benefits of saving money and have a fund available when they become adults.

However, if those who would profit are unaware of it, they are immediately at a disadvantage.

It can be challenging enough to keep track of various accounts, but if so many individuals turning 18 are unaware of CTFs or the amount of money they are holding, something has clearly gone wrong.

Let’s hope that HMRC heeds the PAC’s advice and assists young people in accessing this money because it might make a very real and tangible difference to them at a critical juncture in their lives.

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